The South African Revenue Service (SARS) has released its value-added tax (VAT) Modernisation Consultation Paper for public consultation and comment.
This, as the revenue service lays the “building blocks” to modernise South Africa’s VAT administration system.
The VAT modernisation project is said to “form part of a broader effort to transform tax processes, improve customer service and engagement, reduce the VAT gap and streamline tax administration for VAT traders, businesses and SARS”.
The newly-released consultation document follows the VAT Modernisation Discussion Paper of 2023, which SARS says helped enrich the direction for VAT modernisation.
According to SARS, it has incorporated inputs from the 2023 document and included the “best practices” from peers and multilateral organisations’ consultations.
The paper outlines a proposed digital VAT model that brings together e-invoicing, an interoperability framework and e-reporting to reposition VAT administration for the economy, it states.
SARS commissioner Dr Johnstone Makhubu comments: “VAT modernisation is a major step in reshaping how VAT is administered in South Africa. It seeks to move us from a system that is still too dependent on manual processes and retrospective verification, to one where VAT compliance becomes part of the systems businesses already use every day.
“It is SARS’s belief that this modernisation of service will reduce the burden on compliant vendors, strengthen compliance and safeguard the revenue needed to fund South Africa’s development priorities.”
Makhubu highlights the proposed digital VAT model is intended to deliver practical benefits for SARS and VAT vendors.
For SARS, sharing of reliable VAT transactional data is expected to provide clearer visibility over VAT transactions, more accurate and reliable data, stronger risk-based compliance oversight, and enhanced ability to detect and respond to fraud and close the VAT compliance gap.
Meanwhile, VAT vendors are expected to benefit from a simpler, more predictable compliance experience, lower administrative effort and cost, clearer visibility and faster, more efficient handling of VAT information.
“We are seeking practical, evidence-based input to ensure the final approach is practical, implementable and suited to South Africa’s economic realities. When done well and with high-quality stakeholder input, this work can significantly modernise VAT administration for the benefit of vendors, the economy and the fiscus. The long-term vision is a VAT system where tax compliance becomes a seamless part of ordinary business activity.
“We are, however, clear that this must be developed in consultation with stakeholders so that the final model is secure, inclusive and aligned to South Africa’s needs.”
To access the consultation paper, click here.
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